How To Keep Criminal Debt Collectors From Sucking You Dry

<a href="http://www.flickr.com/photos/nictalopen/188360287/">Marko Milosevic on Flickr</a> As more and more Americans are racking up debt as a result of the poor economy, criminal debt collectors are taking advantage. These collectors employ illegal tactics, aggressively trying to get you to pay off your debts—or perhaps even pay money you don't owe.

Nearly 15 percent of Americans today face collection calls, including the most vulnerable population of senior citizens on fixed incomes. That's twice the number of Americans pursued by collectors 12 years ago, according to the Federal Reserve.

To combat poor regulation of debt collectors in Oklahoma, Bill Bartmann, founder and CEO of the debt-collection company CFS II, helped develop Senate Bill 1430, known as the Bartmann Ethical Debt Collection Act. The bill, which calls for state supervision and licensing of debt buyers and employees, is currently awaiting approval by the state's House of Representatives.

Bartmann says collection agencies sometimes trick consumers into paying debt that is past the statute of limitation. Statutes of limitation vary by state, but the method of operation for debt collectors is essentially the same: The collector pays a company you owe money to—typically a bank—to then have the ability to collect on your debt.

According to Bartmann, the latest weapon of choice for criminal debt collectors is robo-signing, or manufacturing data. "Robo-signing is where the debt buyer purchases 1,000 loans and rather than calling up these customers, they just turn them all over to an attorney and sue all of them," he explains. These robo-signing lawsuits may include debt that might otherwise have a valid dispute, or the debt might be owed by someone of the same name.

Other tactics employed by debt collectors include threats of violence, threats against one's family, and threats of being thrown in jail for not paying debts. Just last month, a debt-collection scammer in Tracy, Calif., was charged for making such threats, which included impersonating law-enforcement officials. "Threatening to have the person arrested is not only illegal, it also seems to be one of the most common threats," says Brent Adams, secretary of the Illinois Department of Financial and Professional Regulation.

Adams says another illegal tactic involves the debt collection agency misrepresenting exactly how much money is owed or where the debt originated.

Harassment is illegal and can take a variety of forms, according to David Certner, AARP's legislative policy director. By law, debt collectors can't use vulgar language. They can't call your employer, friends, family, or neighbors. And they can't call late at night.

If you think you've fallen victim to a criminal debt collector, here are some ways to protect yourself:

Get informed. Under the Fair Debt Collection Practices Act, debt collectors must answer your questions. "You should satisfy yourself as to who they are, the debt that they're referring to, what evidence or proof they have," Bartmann says.

Record the call. Ask the debt collector if you may record the phone call (some states require consent from all parties before a call can be recorded.) "When you say that, you begin to make them nervous," Bartmann says. "Then they know if they say something egregious, they can be held accountable." If the collector says no, you're free to hang up. Consequently, Bartmann recommends that you ask he or she if you can record the call even if you don't have a recorder.

Respond in writing. Under federal law, if you write a letter to a debt-collection company telling it to stop contacting you, the company is obligated by law to stop unless it sues you, Adams says. So issue a formal letter to the company calling for it to stop contacting you.

Get proof. Although collectors may claim you owe this debt, ask the collection agency to send you proof before you continue the conversation. "They are required to do this, upon your request," Bartmann says. "If you don't request it, they're not required to send it."

Issue complaints. If the debt collector makes any threats or acts aggressively, immediately contact the Better Business Bureau (not the bureau where you live, but where the debt collection company is located). You should also call the attorney general in that particular state. It will have a consumer protection division, which is designed to handle such complaints. Finally, complain to the Consumer Financial Protection Bureau. "If you contact those three, one of them will do something about it," Bartmann says.

Lawyer up. If none of these courses of action are effective and you continue to be harassed by a debt collector, hire a private attorney. "You can get them relatively inexpensively," Bartmann says. Adams points out an added benefit of enlisting the help of a lawyer: "If you inform a debt collector that you have an attorney, the debt collector is prohibited from contacting you directly."